Brexit could cost poorer households thousands, think-tank warns
The damage caused by Brexit to the public finances could cost some of the country's poorest households more than £5,500 if the Government attempts to balance the books through welfare cuts, an economic think-tank has warned.
The National Institute of Economic and Social Research (NIESR) analysis indicated that Brexit would create a £44 billion hole in the public finances by 2020.
In order to meet Chancellor George Osborne's target of achieving a surplus, that gap would have to be addressed through austerity measures or tax rises, with welfare expected to bear the burden of cuts.
The NIESR report, which drew on a range of forecasts, based its assessment on a central estimate of a 3.1% fall in GDP by 2020. That would mean a £44 billion fiscal gap by 2020, which would need to be filled if the Chancellor was determined to meet his target.
The NIESR report said: "We assume that the Government decides to meet the fiscal targets set out in its Fiscal Charter.
"In order to recover its fiscal position, the Government will have to alter its tax and spending policies.
"In the worst case, where the Government places 100% of the burden of adjustment on welfare spending, we calculate that different categories of low income households could receive between £1,861 and £5,542 per year less in tax credit and benefit payments in 2020 and between £2,076 and £6,184 less in welfare payments in 2030."
The NIESR acknowledged that Mr Osborne could choose not to place the total burden of cuts on working-age households in receipt of benefits and may not attempt to fully eliminate the deficit by 2020.
The fiscal charter demands a surplus in "normal times" and the NIESR acknowledged "this is unlikely to constitute 'normal times', but the Chancellor will be required to deliver a plan to return the budget back into surplus".
The report looked at the impact on low-income households in receipt of tax credits on Jobseekers' Allowance.
It suggested that, in 2014 prices, if 100% of the deficit was eliminated through cuts to working-age benefits, a lone parent with two children would lose £5,542 in 2020. A working-age couple with no children would face a loss of £1,861.
Labour former work and pensions secretary Yvette Cooper said: "Hard-working families would be hit hardest by the pain of leaving Europe.
"Outside the single market, vital state support and public services would be cut and people would lose their jobs and livelihoods.
"Leaving is a dangerous risk for working people in Britain."
Vote Leave chief executive Matthew Elliott said: "This is yet another report from a former supporter of the euro masquerading as new research that is simply recycling and repackaging previous reports.
"That means the same dodgy assumptions of Establishment economists and the Treasury underpin the findings - it is the same people who predicted the world would end if we did not join the euro.
"We hand £350 million to Brussels every week yet the Remain campaign don't want to take some of that money away and spend it on the NHS. If we vote Leave on 23 June we can spend our money on our priorities."
